Oil rises to $79 on North Sea strike

Wednesday, July 11, 2018 - 08:30 AM

Hundreds of workers on Norwegian offshore oil and gas rigs have gone on strike after rejecting a proposed wage deal, leading to the shutdown of one Shell-operated field and helping send Brent crude prices higher.

One union said hundreds more workers would join the strike on Sunday if an agreement over union demands for a wage increase and pension rights was not reached.

Royal Dutch Shell said that due to the strike it was temporarily closing production at its Knarr field, which has a daily output of 23,900 barrels of mostly oil, but also natural gas liquids and natural gas. Norway is Western Europe’s biggest oil producer and the disruption added to rising global oil supply outages and helped push Brent crude prices up 1.2% to $79.03 per barrel, following a 1.2% climb earlier this week amid concerns about global supplies.

The output of Norway’s biggest oil producer Equinor, formerly known as Statoil, was not affected by the strike so far, the company said, even though it was shutting down drilling operations at its Snorre B platform. Shortly after a midnight deadline passed, a state-appointed mediator said talks between two trade unions, Safe and YS, and the Shipowners’ Association, representing the rig employers, had failed to reach a deal.

“The parties were so far apart from each other there was no point presenting a proposal that could be recommended to both sides,” mediator Carl Petter Martinsen said.

The Safe union wants pension rights to be the same for everyone regardless of whether an employee is new to a company or has many years of experience.

It also wants wages for drilling workers to match those of workers for oil companies, which are higher. The Norwegian Shipowners’ Association said Safe was asking for a 50,000 Norwegian crown (€5,292) salary increase for unskilled workers, equivalent to about 8% of the current wage levels.

The leader of the Safe union said she did not recognise the figures presented by the Shipowners’ Association. Around 670 workers would walk out, with an extra 901 employees joining them from midnight on Sunday if the dispute is not resolved, Safe said in letters to the Shipowners’ Association. Up to 2,250 workers could join the action, it said.

Norway’s oil sector directly employed 50,700 workers in 2017, of which 26,700 worked in production and 23,500 in related services, according to Statistics Norway. It was the biggest strike affecting the sector since a 16-day industrial action in 2012 cut the country’s output of crude by 13% and its natural gas production by about 4%.